Mayhem! Chaos! Trumpalooza Grand Reopening! Advertisers run away screaming! HR by neutron bomb!
The 14th largest social network is up in flames. A super villain (or superhero, depending on your affiliation to a cinematic multiverse) has taken over the Instagram of the political influencers.
St. Elmo of the billions: liberating the bird protocol out of it’s self inflicted capital markets misery …
… or Elon Muk, the billionaire with the morals of buccaneering Ferengi? Svcary questions.
But actually the man himself already spilled the beans.
Think fuck you money on a cosmic scale. Just in case you don’t remember: his current personal wealth pretty much equals the GDP of Hungary.
Should we be concerned? Sure. There’s just a handful of social media platforms out there. On the top you’ll find Meta (Facebook), Meta (Instagram), Meta (Whatsapp), Meta (FB Messenger). Youtube is the only Western outlier, Chinese players fill up the rest of the top 10 (no Twitter here, see above).
No, Twitter isn’t playing in this premier league of MAUs and DAUs. But being the designated playground for many political influencers, activists, journalists and many other players, it’s punching way above its weight.
Removing all existing checks and balances by turning this privately run global town square into the sole fiefdom of a single individual is rightfully scaring many current participants in this ecosystem. Especially with the new owner coming in being somewhat infamous for his rather volatile approach to things.
But, to be fair: the structural problem with social media is not Musk buying Twitter. The structural problem is a setup, which merges technical protocols with their technical platforms. Imagine there would be only one Email service provider on the planet. Or just one global phone company.
Monocultures are inherently dangerous. And definitely not resilient.
So what’s in the box? Some code review at HQ.
The current hubbub with wacky code reviews and drainings of the engineering pool is just a distraction. Like Meta sinking billions in a wacky resurrection of Second Life (while they firmly control the social graph of billions of people).
The drama unfolding around Twitter is about governance. Who should be able to set and enforce the rules – and based on what or who’s values? Mind you: those social media monoliths are global juggernauts – and are quite resilient.
If you ever questioned what’s more important: the star player or the whole club, the deplatforming of Donald Trump gave a quite decisive answer. The empty husk of the freshly reinstated Twitter-Trump handle (no Trump inside – yet) has already way more followers than all of Truth Social, the real RealDonalTrump’s privately owned platform in total.
If we look around in the tech realm, there’s currently three governance models on the table.
Corporate: Alphabet, Meta set and enforce the rules for their properties. Markets and other stakeholders are the checks and balances.
Regulations: governments set the rules for their jurisdictions. With some luck, they are elected and regulate for the common good.
Open source: stakeholders / the community decide.
Who will be running the show?
Twitter is currently morphing into a solipsistic subset of 1. Corporate. Just without any market checks and balances. No shareholders to appease, no advertisers to fondle.
No wonder some people get scared. But not much to be done here. As long as there’s no viable alternative, those platforms do not simply just go away. Mastodon is out there since quite some time. But not even Trump’s Truth Social had the pull to make this federated network of mom and pop servers fly. Nor will the Twitter-takeover.
So far, so bad. Now let’s have a look at 3. open source governance. I know the timing may be a bit off. But check out how the crypto space is dealing with governance. Don’t forget: public blockchains are open source and open data, just with a built-in financial model.
What you’ll find is a plethora of different approaches. From core dev decides to token-based oligarchies to community based DAOs. It’s a well funded lab with lots of learnings to apply to orgs like Twitter as well.
Will Twitter be tokenized and open sourced? Will Elon paint it red and merge it with Jack’s box? We don’t know. Currently we’re back to square one and have to pray that the new digital overlord adheres to Google’s claim of the nineties: Don’t be evil. Which is anyway the admission that as long as everything takes place in a black box, you have to trust the owner of this box and are at his mercy.
We know what you did last summer: Self Sovereign Identity vs jackbooted anti-abortion police.
Our current surveillance economy is quite alluring: smooth user experiences, free services, just some harmless data collection going on. I didn’t do anything wrong, so why should I care?
Ah, well: times can be changing. Overturning Roe vs Wade opened pathways for US states to enact anti-abortion legislation the Taliban would be proud of. The good thing: non-compliance will not (yet) lead to a public stoning. But literally overnight your status may have changed from patient to criminal perpetrator.
We know what you did last summer.
That’s where our surveillance economy finally goes fully Dark Mirror. In the spotlight: menstruation trackers. They help you to get pregnant or to prevent unwanted offspring. Or, in the eyes of a prosecutor in an antiabortionist state: they collect incriminating evidence. Actually, it’s the users collecting the evidence themselves. The apps make it just easily accessible.
To be fair, not all apps are created equal. On the surface, GDPR may have caused an epidemic of toothless cookie banners. On the backend side, compliant apps prevent those kinds of data free for alls, which are the backbones of targeted advertising and jackbooted police knocking at your door pushing your digital past in your face, because they really know what you did last summer.
So how to prevent this? In the case of GDPR, the Europeans took by heart that Google not only had started with their “Don’t be evil”-claim – but finally dropped it somewhere on the way. GDPR’s asks for a somewhat less ambiguous approach: privacy by design. Every piece of personal data you don’t collect can’t be abused. Which might at least prevent some nefarious mobile games, which collect any kind of data besides your score in evading subway trains or fighting orks. Like you hanging out at this abortion clinic, which in the eyes of a prosecutor may look like probable cause for further investigations.
But Self Sovereign Identity puts the privacy by design aspect on a different level. It’s your data. Only you hold the keys. There’s no custodial aspect. Nothing to be subpoenaed here.
Good thing there’s an infrastructure growing to support the self-custody of data. DeSoc, the Decentralized Society, may be where web3 is headed. Especially after the latest blowdown weeded out some of the more blatant get rich quick schemes.
I’m quite aware of some of the detractors, mostly out of the progressive-left spectrum of the tech establishment. Instead of acknowledging, that crypto and web3 finally enable economically feasible ways to build and maintain open source software creating open data, they concentrate on a plethora of ideological flaws and by criticizing a handful of bad apple trees they dismiss the whole forest.
Haha, got you, I hear some already snickering. Isn’t putting menstruation data open and immutably on a blockchain even worse? All to be connected with your public wallet, where a gazillion other data points are to be connected, with your ENS name being the final nail in your privacy coffin.
True. Of course you can create a setup, which combines our current surveillance economy with immutability. But that’s only going to happen if we let the same type of amoral market forces gobble up this tech as well.
There’s something weird going on. For what it’s worth, some tech progressives developed a heavy allergy towards anything related to crypto and web3, Tante and Cory Doctorow being just two examples. Of course there’s many things to validly criticize around blockchains et al. But a common thread around their critiques looks like this:
It’s an all on assault on progressive values AND the technology will never scale. Wait: if it’s not going to work out anyway, why would you even care?
It’s all about scamming retail investors in a big Ponzi scheme AND big VC money is pouring in to drown all decentralized visions in a shitload of money. Wait: so the VCs are cashing out the early retail Ponzi victims and that’s a bad thing for retail, even if you’re quite convinced that nothing ever might work?
Hmm. Most lines of arguments seem actually quite the contradictions in themselves. But in the end, Tante puts it like this:
Web3 is dominated by libertarians. I don’t see libertarians as my political allies which doesn’t make me want to do their homework for them.
Of course he’s right: the cryptosphere seems to be run by Lambo Libertarians. They are loud and crass, many nouveau riche, some openly sociopathic. To create your own set of crypto related antibodies, just watch some bits and pieces of Bitcoin 2021 in Miami, probably last year’s most spectacular meet & greed.
But, well: that’s what’s happening if you excuse yourself from participating in a discourse. You cede the ground, and here come the huns. It’s a self fulfilling prophecy.
Let’s quote Tante again:
Web3 is a project that runs against my personal political beliefs of more access, more sharing, less exclusion, less financialization. That’s why I don’t work on fixing it.
And if you see something in the world that you consider wrong on a fundamental and structural level, you usually don’t try to patch it or fix it. You try to remove it, stop it. That’s what I am working on.
Well, is there really something inherently “libertarian” in the underlying technology? And: what’s the alternative? Let’s look at alternatives first and leave the tainted tech idea for another day.
I think we can all agree that money and momentum are currently quite in favor of web3 technologies. That’s actually the main reason for the aggressive backlash.
So I was actually quite baffled, when one tech influencer I don’t want to name here pointed into the following solution. A promising way to tame the power of the mighty monopolistic platforms may be platform socialism. What is it? He linked to a Youtube video with currently 193 views. I suspect the platform socialism approach to be ideologically sound and clean. But to dethrone the abomination run by the company formerly known as Facebook, we probably need a little bit more momentum. Or lots of patience. Or prayers that FB is destroying itself, sooner or later. At least they shrunk last quarter to a mere 1.9 billion DAILY active users.
That’s not even carrying a knife to a gun fight. That’s preparing to battle the galactic empire with a tooth stick. And don’t start macgyvering me, please.
ein Replik auf Tantes Blockchain ist doof. Weil diese Art von Ignoranz jetzt mal wirklich kontraproduktiv ist.
Er kam, sah und schriebte: @tante widmete sich in einem langen Beitrag dem Third Web. Und, ganz ehrlich: ich war dann doch recht enttäuscht. Hier meine pieselige Detailkritik, samt Bausch-und-Bogen-Verdammung.
Ach ja, und erstmal auf Deutsch. Der beantwortete Text kommt zwar auf Englisch. Aber der vertretene Ansatz scheint mir dann doch sehr landestypisch. Und kontraproduktiv.
tl;dr: Dissen aus aktivem Desinteresse bringt keinen weiter, zeugt nur von aktivem Gestaltungsunwillen – und richtet deshalb exakt da massiven Schaden an, wo ausnahmsweise mal Gestaltungspielräume entstehen.
Das Problem
Die deutsche Tech-Intelligenz der alten Schule hat vor geraumer Zeit beim Thema Crypto die mentale Türe zugeschlagen. Aus einer Handvoll teilweise durchaus sehr gut nachvollziehbarer Gründe. Wer ein paar Stunden seines Lebens sinnlos vernichten möchte, bekommt einige hier auf der Bitcoin 2021 Miami am Stück auf dem Silbertablett serviert. Die einleitenden Worte spricht Alt-Senator Ron Paul, ein bizarrer Alt-Libertär aus dem Kuckucksnest, Grifter-VCs der alten Schule treffen auf laseräugige Hedge Fundies im Glück und dazwischen hampeln noch zahllose Climate Change- und Corona-Leugner.
Tür auf, Tür schnell wieder zu, danke das war’s? Kann man so machen. Muss man aber nicht. So abschreckend dieses Crypto-Gruselkabinett auch wirkt: die User-/Verkaufsveranstaltungen von Oracle zB sind auch eine recht spezielle Nummer. Deshalb funktioniert deren Software trotzdem doch halb leidlich, was man so hört, und eine Verdammnis relationaler Datenbanken wäre wohl auch ein wenig übers Ziel hinaus geschossen.
Wie alles begann
Ich geh mal Schritt für Schritt vor und werde mal die entsprechenden Stellen bei Tante verkommentieren. Aber erstmal zu den Anfängen.
Selbiger Thread geht so dann weiter:
Bei Tante liest sich das non-abstinence based non-scolding dann so:
I had hoped that I wouldn’t have to write this thing, that blockchains and NFTs and all that would just go away and become a chapter in a book about weird economic scams. But if 2021 taught us anything it’s that we can’t have nice things so here we are.
Arrrgh. SPLASHHHH.
Der laute Platscher war das mit dem Bad ausgeschüttete Kind. Und wie Kinder schon vom Nikolaus lernen “nice things” gibt es schon, aber aber nur wenn man sich übers Jahr auch darum bemüht.
Aber erstmal zu den Details
Ich werde hier mehr oder minder der Reihe nach vorgehen. Aber bitte nicht drauf festnageln.
Consensus
Wenn Techniker sich eine Blockchain ansehen, dann finden sie eine verteilte Datenbank, die zwar recht schnell zu lesen, aber nur mit Klimmzügen zu beschreiben ist. “Schuld” daran ist Bitcoins ominöser Satoshi Nakamoto. Da es keine zentrale Schiedsstelle gibt (und geben sollte), die den Schreibzugriff kontrolliert und zudem sich alle Nodes weder kennen noch trauen können müssen, kam er auf sein durchaus ingeniöse Lotterieprinzip des Proof of Work.
Das Gute an PoW: es funktioniert.
Der Haken: vorstellen kann man sich ein modernes Mining Rack in etwa wie einen elektrischen Durchlauferhitzer. Vorn kommt der Strom rein. Anstelle der Heizspirale sitzt ein aufgeregt werkelnder Prozessor. Hinten fällt bisweilen eine Cryptocoin raus. Und ansonsten hauptsächlich ständig viel Wärme.
Dass das nicht wirklich sauber skaliert, war schon vor Jahren klar. 2014 hab ich’s mal ausgerechnet. Schon damals benötigte man den Output eines halben Kernkraftwerks, um das Bitcoin-Netzwerk zu betreiben. Die Hardcore-Libertinäre hat das damals schon nicht interessiert. Und die, die sich für Climate Change erwärmen (haha), wiederum nicht für Crypto. Was dann leider zur Folge hat, dass Bitcoin heute in etwa soviel Strom braucht wie ein mittlerer Planet, besiedelt von wuseligen Steinkohleverstromern.
Aber nun ist es ja nicht so, das Crypto generell Strom fressen muss, als bräuchten wir kein Eis in der Arktis.
Dass es durchaus ökologisch sauberere Alternativen gibt war damals schon absehbar.
Dass beispielsweise Proof of Stake als Alternative funktioniert, zeigen beispielsweise Tezos, Cosmos und Avalanche, die per Design darauf ausgelegt sind.
Dass der Umbau bestehender Systeme nicht ganz trivial ist, muss man gerade Tante glaub ich wirklich nicht erzählen.
Dass PoS Probleme haben kann, ist für die Ethereum Foundation auch keine neue Erkenntnis.
Aber das hier benannte “Problem” …
This one needs less energy but has other problems (for example the inherent power imbalance between those with few and those with many tokens: A person whose rich will always win in a conflict with a person with fewer tokens).
… sagt einfach nur, dass jemand sich mit dem Thema auch nicht mal marginal beschäftigen möchte.
Vorstehende Aussage trifft zwar auf unser aller Finanzamts-Kommunikation zu (CumEx schlägt Arbeitszimmer). Hat aber mit PoS bis auf das Wort Token recht wenig zu tun.
Kein Konsens
Kommen wir zum Konsens. PoX schafft den Konsens, der die zahllosen verteilten Datenbanken synchron hält. Das ist umständlich, aber dann schon auch notwendig. Weil ohne Konsens eben kein dezentrales System, wie angefordert.
Folgender Kommentar ist deshalb ein ein Zirkelschluss:
Traditional databases don’t face that challenge because clients log in and the database server can just – like a referee – decide who gets to have their data written first.
Oder, anders gesagt: bloss weil es Quatsch ist, mit einem 40 Tonner die Altstadt von Rothenburg ob der Tauber zum Brötchenholen befahren zu wollen sind LKWs nicht generell als aufwändiger Unfug abzulehnen.
Ohne Konsens-Klimmzug komme ich halt nicht allzu weit, wenn die zentrale Anforderung ist, dass es eben exakt KEINEN zentralen Schiedsrichter geben soll.
Scaling
Jetzt kann man natürlich drüber streiten, wie relevant Dezentralität tatsächlich ist und wann der Ansatz Mehrwert bringt. Aber dass es sich dabei um technisches Spielzeug handelt, welches generell nicht skaliert ist nicht wirklich Stand der Technik:
Bitcoin currently can do about 4.5 transactions a second. FOR ALL OF BITCOIN. Ethereum is a little better and can do about 30 transactions a second. That is ridiculously low. The VISA network to process credit cards can do up to 24000 transactions a second (they currently do about 1740 a second). Try that number on for size.
Lassen wir den immobilen Bitcoin-Block mal aussen vor. Auch Ethereum ist noch vergleichsweise langsam und wir lassen ebenso alle geplanten Updates beiseite weil Papier und nicht real implementiert. Aber wie sieht es denn zB mit den kompatiblen Ethereum Virtual Machine (EVM)-Chains aus?
Anscheinend ist die Technik nicht ganz stehen geblieben.
Web3 is a security disaster
Das ist freilich richtig. Self Custody für technisch unbedarfter Nutzer ist ein Rezept für ein Desaster. Das gilt freilich auch für Ansätze wie guck dir drei Videos auf YouTube an und setzt dir dann deinen eigenen Linux-Server auf, um damit deinen Installationsbetrieb mit 10 Mitarbeitern zu verwalten. Kann man schon machen. Sollte man aber besser nicht. Heisst jetzt aber nicht, das Linux generell ein Sicherheitsdesaster ist.
NFTs don’t do what they claim to do
Beweisstück A: right-clicking Kunstdiebstahl
Sagen wir mal so: NFTs machen nicht das, was der Text behauptet dass sie behaupten zu tun. Was sie allerdings tun: schaffenden Künstlern eine zusätzliche Einnahmequelle zu verschaffen.
Full Disclosure: mehr oder minder zur selben Zeit als Anil Dash mit Monegraph und damit sozusagen proto-NFTs experimentierte, hab ich vergleichbares in Berlin mit einem Partner probiert: denn für Kreative kann künstliche Verknappung der digitalen Endlosigkeit durchaus hilfreich sein, wenn sich der Vermieter nicht mit Gitarrengeklampfe bezahlen lässt und der lokale Supermarkt deine hand gemalten Aquarelle nicht akzeptieren mag.
Närrischerweise basteln wir damals auf Basis relationaler db und Hybris. Aber stießen darüber auf den Nebennutzen von Bitcoin, Metadaten in einer Blockchain festzuschreiben. Ausser ein paar freundlichen Worten bei Businessplan-Wettbewerben und einer lustigen Präsentation im RAI in Amsterdam vor Gavin Andresen als Oberjuror kam freilich nicht viel dabei raus. Waren wohl etwas früh dran.
But people can still right-click the image and download it and use it.
Uff. Houston, wir haben ein Kommunikationsproblem.
So what does “ownership” even mean in that context?
Zeige mir ein digitales Werk dass du jetzt schon “besitzt” und ich zeige dir die Plattform-ToS, die dir buchstabieren, dass du nichts erhalten hast ausser einer limitierten Nutzungslizenz an einer Handvoll Daten.
There are only a few exchanges to buy and sell tokens, there are only very few NFT markets. Web3 hardly exists but it’s already centralized.
Muss ich Yachtclub-Affen als Kunstwerke ernst nehmen? Jeder wie er’s mag. Aber sagen wir’s mal so: im Gegensatz zu einem Zauberschwert, das mir mein Gameprovider verkauft, sind standardkonforme NFTs zumindest mal plattformübergreifend verfüg- und handelbar, egal ob Opensea, Rarible oder Zora oder …
Was aus Fortnite kommt, bleibt dagegen in Fortnite. Ist nicht wirklich schlimm. Ist aber so.
NFT ≠ Apes & Pepes
Und sind ja nicht nur Affen als NFTs unterwegs. Rafaël Rozendaal sei hier mal als Beispiel genannt für einen digital-Künstler der ersten Stunde (ich erinnere mich gern an seine ersten Gehversuche mit Screen Savern), der inzwischen auch im klassischen musealen Raum angekommen ist. Und, wie soll ich’s sagen, “natürlich” inzwischen auch mit NFTs arbeitet.
NFTs sind eine spezielle Form digitaler IDs. Digitale Kunst ist ein spezieller Use Case davon. Der Spekulationswahn drumherum: geschenkt. Wer beim Web1.0 nur die New Economy-Blase gesehen hat, hat dann auch den ICE verpasst, weil ihm der Trambahnschaffner zu teure Krawatten getragen hat.
Web3 is just an attempt to find a use case for blockchain
Den folgenden Absatz zerstückel und kommentiere ich jetzt mal Block für Block. Weil der mich wirklich gewundert hat.
When an engineer looks into a problem, they will at first gather the requirements. What does the system they need to build need to do and how and for whom etc. Afterwards they will look at existing technologies and see which technology and platform fits best to the requirements.
So sollte es sein. Wobei der Prozess generell etwas schwieriger ist, da der Anforder gerne auch Schwierigkeiten hat, seine Anforderungen überhaupt nachvollziehbar zu formulieren. Besonders wenn er keine Vorstellung davon hat, was machbar oder sinnvoll ist.
With Web3 it’s the other way around.
Oha!
People had blockchain which was really only useful to run unregulated security trading without paying taxes (“Bitcoin”) but really wanted to use it somewhere.
Moment!
Blockchain hat sich also ganz ohne Softwareingenieure entwickelt, landete als Deus ex Machina in den Händen von steuerhinterziehenden Spekulanten, die jetzt verzweifelt nach neuen Use Cases suchen, weil nur unregulierten Wertpapierhandel zu betreiben auf die Dauer zu unbefriedigend ist?
Oder handelt es sich etwa um steuerhinterziehende Softwareingenieure, die nun weitere Requirements erfinden, um ihre magische Gelddruckmaschine weiter zu füttern, ohne die nun real existierende Technologie zu evaluieren?
Wer beim zweiten Punkt jetzt “ja, genau” ruft, hat in einigen Fällen durchaus Recht. Überall, wo Geld zu machen ist, tauchen dieselben garstigen Gestalten auf. Als Generalisierung wäre es allerdings ein infame Unterstellung und zeugt von einem etwas dusterem Menschenbild im allgemeinen und speziellen (bezogen auf Softwareingenieure).
Ich mache gerne mit ein paar Protagonisten bekannt, die äusserst integer sind, sehr genau wissen, was sie tun (und nicht unbedingt nur die wenigen weissen Schafe in einer ansonsten dunkelschwarzen Herde sind).
Since in the 10 years blockchains have existed no real use case has emerged they just basically reshaped a problem (the web is centralized and controlled by a few companies) forced blockchain into it and claimed to have a solution. They do not and this marks another year where blockchain has not found a use case aside from tax fraud.
OK: wenn man nicht hinschauen möchte, weil man sowieso alles für gehypten Quatsch hält, dann sieht man natürlich auch nix.
Dass Privat- und Zentralbanker sich intensiv mit Themen wie der Digitalisierung von nicht-virtuellen Währungen beschäftigen, geschenkt. Der Use Case “programmierbares Geld” geht schliesslich ans Kerngeschäft (während teilweise durchaus fragwürdige Stablecoin-Schattenkonstrukte schon munter im Einsatz sind). Fragen wie “was darf ein Zentralbank-Euro können” oder “wie sieht der Retail Use Case für einen Commerzbank-Euro aus” beschäftigt unsere Banker nicht erst seit gestern vormittag um 11:00. Kann man natürlich alles ignorieren. Geht ja nur um unser Geld. Geht uns ja nichts weiter an.
Warum sich Supply Chainer für das Thema interessieren muss natürlich auch keinen interessieren ausser Supply Chainer. Und selbst die können sich bei ihrem Thema of nur mühselig wach halten. Geht ja nur um ESG-Compliance und Produkttracking (und mir ja egal, ob in privatem SaaS oder open sourced in DLT). Infrastruktur ist in diesem Fall wirklich Kärrnerarbeit.
Über technische Protokolle, deren Entwicklung und Support über token gesteuerte Nutzung finanziert wird, muss jetzt auch keiner nachdenken. Weil egal ob API3 oder Gitcoin oder Radicle, alles nur Ausweichmanöver steuerhinterziehender Ponzi-Schemer und aus Log4j haben wir ja gelernt, dass man kritische Infrastruktur durchaus als spendenbasierte Freizeitprojekte betreiben kann.
Um auf Anil Dash zurück zu kommen. Was er expressis verbis sagt: muss man nicht mögen, aber der Zug ist längst aus dem Bahnhof ausgelaufen und lässt sich durch Ignoranz nicht aufhalten.
MVP, the Minimum Viable Product: you’re laser focused on solving one problem. Everything else is just a distraction. In regards of Bitcoin, the focus is clear: in 2007 our centralized monetary system had quite spectacularly crashed. Total doom was somewhat averted, some monetary were band-aids applied. And seemingly out of the blue falls a software protocol, which jumpstarts the Internet of Money from zero to 10.000 BTC for 2 pizzas to a multi trillion USD market.
4 years after the notorious pizza deal (with roughly 500 USD per BTC now worth a very nice 2 bed room apartment in Manhattan), I had a first look at BTC’s already notorious consumption of energy. Back then, 0.13 nuclear power plants were necessary to feed BTC’s Proof of Work consensus. CPU mining was already a thing of the past, Ethereum still on the drawing board, and Proof of Stake as a less energy hungry consensus model even more unproven than PoW back then.
Where are we now? Here’s the pizzas’ post crash valuation in June 2021. Think something between a fleet of super yachts, a sizeable island archipelago in the Caribbean, or a pre-owned space station.
So what about the power necessary to run the network? Ah, well …
Yes, this certainly sounds like a lot of energy. Or, in other words: it is. And, for the time being, will be. In a bit of a distant future, harvesting energy will be a virtually free commodity. But until then, energy conservation is where we’re heading. Because saving energy is a much quicker win.
Meanwhile, Harvard Business Review reiterates some of the standard arguments of some vocal Bitcoinistas. Mining uses more greener energy than average and its worth it anyways. Finally, the piece ends with a slight finger wagging:
What’s missing here? The alternative. While Ethereum is preparing for the big switch towards PoS, and newer chains like Cosmos, Polkadot, FLOW are live with PoS since their Genesis, the Bitcoin universe seems eternally stuck in its rationalization of being a massive stinker.
There’s three main line of arguments you might encounter:
BTC is much greener than you think. And it’s even an incentive to invest into a green future. Let’s call this the Happy Rainbow Fallacy.
Man made climate change is not a thing anyway. Therefore: nothing to worry about, please move on. This may be called the I am Right and You are Wrong syndrome.
It’s worth it (and gold, FIAT etc use MUCH more energy). Here weg go: Whataboutism meets Low Self Esteem.
The Happy Rainbow at least kind of acknowledges that something may be off here. Yes, we use a lot of energy. But at least compared to let’s say the US average, the CO2 output is much less. Because many miners use green energy. That’s all very fine of course. But let’s put it like this: BTC are not the only scarce commodity. So is clean power equipment. Therefore, every green coin W/h equals a coal plant not converted yet. But hey, look here, the sky is pink and filled with winged unicorns.
I am Right and You are Wrongis an integral part of the fact free universe of climate change denialism, closely related to the “THERE IS NO VIRUS” plandemiacs and the chemtrail survivalists. If you listen to some of the godfathers of coinage, you get an idea that being a brilliant mathematician doesn’t prevent you from becoming a racist blubberhead on other affairs and unfortunately this kind of meme-DNA seems quite prevalent in the space.
Whataboutism meets Low Self Esteem. Yes, we know: the gold is DIRTY by default and what’s to love about the financial system. But maybe you didn’t get the question right? It’s not about the question “is BTC useful enough to put xyz extra tons of CO2 into the atmosphere” but “how do you plan to reduce your carbon footprint”.
Basically, all three line of arguments are based on is the following assumption: there is no alternative to PoW. Let’s not get into the religious wars around the technicalities of the issue. It’s not the year 2007 anymore and there had been quite some learnings and deployments.
But, unfortunately, a range of monetary iconoclasts of yesteryear have turned into functional conservations in regards of the vehicle they’re massively invested in, time- and moneywise.
This purely defensive position comes at a price.
The ESG Dilemma
How is started
How it ended
When you value your company higher than your crypto holdings.
Bitcoin positions itself as Digital Gold, an immutable store of value, an investment asset where more and more institutional investors are moving in. But some institutionals are a bit hampered here. More and more legislation is now paving the way to funnel money into crypto assets. But the E in ESG (Environment, Social, Governance) is gaining much more weight as well. So being the unapologetic energy hog might be a bit counterproductive.
It’s just like why Musk did flip flop on BTC for TSLA. When the dirt coin story clashed with TSLAs clean knight in shining armour image, Elon became a Tesla-maxi.
Yes, being an unapologetic stinker is bad for business.
OPEX
Not to forget: energy is a cost factor as well. If you are a true monopolist by default (A.K.A. a true Bitcoin maximalist), OPEX is almost irrelevant. In any other line of business, it’s either you move it down – or you will be moved out.
Regulatory Achilles’ Heel
If you don’t clean up your act I tax you out of the game and here’s our CO2-neutral centralized Central Bank Digital Currency to play with.
But that’s the wheel of life: successfully rationalization away your weak points will be your final weakness.
COVID-19: some countries are doing comparatively fine, some went down the hole. And everybody is wondering: what’s going on? So that’s my try to come up with some ideas of what went wrong and what went well.
I count myself as lucky. My former colleagues in India are still in lockdown, while the subcontinet explodes around them. My friends in the US are struggling with a situation, where calling it batshit crazy would be putting lipstick on a rather frantic pig.
I count myself as lucky, because Germany is still mostly doing fine. Health-wise, we managed to somewhat contain the curse. Economically, the dip was comparatively harmless – which most likely has a lot to do with the former. A homegrown candidate for a vaccine seems to be under way, with no undue shortcuts, all proper process.
Yes, our share of crazies tried down to knock down our parliament and there’s always the random maskless superhero waving a random medical certificate downloaded from the Internet, which actually says more about the bearer’s mental capacities than his alleged medical conditions. But, hey, we’re coming to that.
For now let’s look at what went well in Germany. A virus is a rather uncanny thing. It’s neither dead nor alive, a parasitic string of information which converts an unsuspecting cell into a replicator of itself. This latest Corona virus now comes with a feature set, which made it quite successful: rather stealthy, quite contagious, not too deadly (killing too many hosts limits the spread of the disease).
Dealing with this as a society comes with many challenges. Primarily, it’s a math problem. The more people get it,
– the quicker herd immunity will be reached (virus pretty much disappears due to lack of ready hosts) – but the more people get it, the more will fill up hospitals and ICUs, more medical personnel will get infected, thereby reducing the level of available health care, and people will die
Unfortunately, for most people math is already the problem. Exponential growth is NOT a human dimension. It’s hard to grasp, but can nicely be visualized.
It’s not that complicated, is it? Well. End of March, one of Germany’s leading news channel came up with this model calculation: 168 trillion Germans will be infected in just anbout 100 days.
Math on meth.
Yes, math is hard. But if you gathered already a bit of data and your model is sophisticated enough, you can not only calculate unfettered exponential growth quite well. You will be able to estimate the effect of different measures, which then need to be executed properly. Step by step, measure by measure you will be able to lower the probability of further contagion. There’s no silver bullet. You make the viral threat wither by slowly starving it out of potential hosts.
If you seem to loose control, try to shutdown as much as possible. The less people meet and greet, the lesser the spread. Obviously, this comes with quite a price tag attached. Shutting down an economy is quite costly. And even deadly. Shutting it down too early makes you look silly and the competition just leaves you in the dust. Shutting down too late lets the virus rampage through the population – thereby shutting down the economy anyway, but in a less controllable way. It’s a loose-loose game, with no happy ending.
From this perspective, Germany was setup quite well to deal with a crisis with many unknown factors. Despite being a Western country without any real virus encounters in the last decades and not really being up to the game, unlike places like Taiwan or South Korea.
It may have helped to have somebody at the helm with a solid scientific background and a very clear and analytical mind.
The German way: the Chancellor explains the R factor.
Because, obviously, not all heads of states are created equal:
👏👏👏: soon after this statement, Boris was treated for COVID, while too many Britons continued to shake hands and, not too surprisingly, got infected as well.
If your estimated leader doesn’t listen to epidemiologists and other scientists or experts, but to his gut feelings, there’s a good chance that the outcome will pretty much resemble the outcomings of his digestive system and you end up knee deep in 💩💩💩.
But some systemic factors may be even more relevant. Germany is traditionally a quite decentralized society. In case of viral threats, the local departments of health are in charge. They collect the data and perform the tracking and tracing. One of the key data points: as long as the local departments could track and trace, the pandemic was pretty much under control. But when the case load threatens to overload the system, further steps need to be taken. That’s why timely information is so critical.
The testing is done mostly by independent private labs. The very moment the Charité/WHO test kit was available, they added Corona to their range of tests. Because of course it made business sense. The notable effect: testing scaled really fast and well.
Compare this to the disaster in the US, where the CDC sits like a partially defunded spider in its web and lost almost two months due to some rather unnecessary mishaps.
The CDC’s German counterpart, the Robert Koch Institut, has a much leaner assignment and only an advisory role. In the beginning of the crisis, RKI’s president Prof. Dr. Lothar H. Wieler press briefings were widely watched by many interested citizens as well. Being a veterinarian by trade, specialized in microbiology and animal pandemic, he might sound like a weird choice. Especially with him being, of his own account, a bit dyscalculic (and dealing with epidemics, as stated before, is mostly a math problem). But his calöm way of communicating worked pretty well.
Of course, the RKI had their challenges as well: masks where 1st a no go for the public, until the simpler versions where renamed into “Mund Nase Bedeckung” (mouth nose coverings). It would have been Orwellian, wouldn’t it have been so blatantly ridiculous, as in trying to keep up the original statement alive (masks make only sense for medical personnel) while still making it clear that Mund Nase Bedeckungen formerly known as masks (and publicly still known as masks, of course) are really important and helpful.
28.01.2020: Germans trust grey haired academics.
So the German anti-pandemic engine is purring like a brand new Mercedes, we soldier on for a couple of more months and then do the final lap with a ready vaccine. 🏁 and off we go. Not so fast.
Let’s stick with the car metaphore for a minute. Yes, everything seems to be running nicely. And since 1886, when Carl Benz patented the first ICE car, the automobile has evolved nicely. It’s just a bit unfair that a Tesla for half the price is twice as fast and sexy.
Same thing with the RKI. They have spectacular data scientists on board. Their modeling skills are phenomenal. Alas, the whole setup in regards of collecting data pretty much has been modeled when this guy’s phone had been the pinnacle of modern communications technologies.
A typical reporting chain for an infectious disease might look like this:
person visits doctor with sore throat
doctor performs test
test gets sent to lab
lab tests. Result: corona positive.
lab notifies doctor
doctor notifies patient
doctor notifies local health department (phone, mail, email, fax)
local health department collates all notifications by local doctors in some kind of document
local health department sends data to RKI (email, fax)
RKI puts data into their system
If you wonder why the whole chain is so convoluted, you’re not alone. Yes, we naive outsiders would think that at the very moment the lab has the result it could automatically notify the RKI (after all, time is of the essence).
But unfortunately, this is quite symptomatic for the RKI – and a general German challenge. Point in fact: if you travel to Spain, you preregister your data on the web. Two days before arrival you get a QR code which is then easily scanned at entry. The RKI solution: download a PDF, print it out and fill it out by hand (no, it’s not a form of course), leave the signed copy with the airline staff. And if you enter one of the Corona testcenters for travellers: you get the same form again and fill it out again so you can watch somebody sitting in front of you trying to decipher your handwriting and putting it finally into a computer.
This process, seemingly designed by slightlky demented Franz Kafka, is unfortunately kind of emblematic for the offical German approach to all things digital.
Alternative für Digital
Richard David Precht, our favorite TV philosopher proudly states to have a smartphone with no apps. I’m not really sure what he means by that, because I would assume that this would imply just a black screen he’s staring at but what do I know. Maybe he needs this visualization of nothingness, while watching other people getting pestered by Whatsapp notifications, work emails and text messages.
What he knows is that digitalization is inherently dangerous (which is true, like for pretty much every technology) and the best approach is to abstain (which is pretty much bonkers, as with pretty much every other technology as well).
The effect of this widely spread mindset is visible all over the German Internets. Especially government run services. Just a random example out of my encounters with the online services of the City of Berlin. As office hours are either limited or totally canceled, many service can and should be handled online. Yay. Little did I know how they implemented it.
– prepare your documents as PDF – send it via email to a specific mail address – wait (but don’t wait for any advanced things like an autoresponder acknowleding the receipt of the docs, not even talking about the inherently unsafe process of sending out critical documents via email …) – wait, but don’t call: nobody has any idea anyway if the documents reached the right address or if anything is being processed – I’m still waiting. But then it has only been two and a half weeks. For a service where they proudly claim can be finalized immediately.
This digital scepticism is hampering efforts all over the place. After some publicly stated scepticim about the track and trace app, the RKI is now fully endorsing the app – which had anyway been developed with RKI on board. Adoption could be much higher. But then there’s a curious coalition of digital sceptics, who do not a trust a fully vetted open source app. But happily scribble their contact data on paper sheets openly laying around in cafes and restaurants or hand over rather critical personal data to some airline purser who subsequently will probably handover your data to somebody else, we just do not know whom for doing something with it we don’t know either.
That this paper data is inherently less secure then a fully anomynized digital service has already been proven by the Bavarian minister of interior affairs. He allowed the Bavarian police to use those mandatory paper tracking lists for crime related searches. A brilliant move: he is perfectly emphasizing the distrust people already have in regards of sharing their data. Which will affect the trust in the fully anomynized app as well. And lead to even more Donald Ducks and Homer Simpsons signbuing into the local bars. That’s how you put a monkey wrench into system critical process. But then, he was the guy installing a rather nutty right winger as the head of Germany’s internal secrect service.
Stupid is as stupid does. And the fact that until now, either by luck or apt handling or both, Germany managed to come out fairly well out of the virus crisis still leads to a fairly small but shouty alliance marching against the virus. Or actually, the containment measures. Initially I thought this might be related to the fact that German death numbers are fairly low. Which might or might not have something to do with the setup of the German health care system. Some wing nuts actually made this argument (“See, we don’t need masks because the streets have not been filled with dead people”). But then, in the US some streets have been filled with dead people but the anti-vaxxers, anti-maskers, anti-Gates, plandemic Qanon wackos are marching there as well.
The only good thing I can read out of the idea of a plandemic is this implicit belief in the organizational capabilities of us human beings. Any project manager will to tell you: humans are barely able to plan a lunch break. But this cabal gets Israel and the Hamas to secretly cooperate, just to keep up appearances.
If you believe that, please DM me. I think there’s several bridges you might be interested in.
What’s the thing with the GDPR? Here’s the situation in a single tweet:
Just received an email from a wealthy Nigerian Prince. He told me that he doesn’t have any fortune to share with me at the moment but he would appreciate if I could let him know before May 25th if I wish to continue receiving emails.
(Of course, that’s utter nonsense. The Nigerian Prince will be fine with you sending him consent in June, July or 2020 or whenever.) But why this sudden hubbub about the acronym GDPR, which causes all those spam-like messages asking you to click somewhere to receive more spam-like messages in the near future?
Say Hi to the General Data Protection Regulation of the European Union, which is in place since quite some time but starts to become enforceable on May 25. In a nutshell, what’s regulated is how corporates have to deal with personal data in our digital world. It’s still a bit rough and undefined on the edges, which leads to messages like this:
Yes, everyone is a bit late in the game (due to lack of clear specifications), some lawyers and consultants are making a killing, some tech and product teams loose sleep and weight.
The weirdest approach I’ve seen so far is this, https://gdpr-shield.io/, presented by all means by a German company.
How does it work? Simply paste our JavaScript snippet into your website’s code. We’ll check every visitor of your site and will block access to users located within the EU.
Uhm, Ok. Sounds legit. As long as their JavaScript can verify the citizenship of an anonymous Internet user. I’m honestly still unsure if this is a totally bonkers snake oil scam or just very nerdy satire.
What’s the real life impact of the GDPR? For users, it mostly means that your data might become a little bit more safeguarded. Less sloppy sharing of unprotected Excels with medical information. Less handovers of personal information from A to B to Cambridge Analytica. Your data will still be floating around like crazy. But the crazy will become a little bit more contained.
And what’s the impact on business? If you listen to some startup gnomes, the world of European innovation is coming to an end. How can I build the next Facebook, they ask, when the EU puts out a privacy regulation, which doesn’t end with “and if you don’t listen to the regulator, you won’t get any free avocado toast for lunch for the next 14 days”? Instead, some bad hombres in Brussels came up with the following maximum penalty:
Up to €20 million, or 4% of the worldwide annual revenue of the prior financial year, whichever is higher, shall be issued for infringements of …
That’s quite a statement. Applied to Facebook’s 2017 revenue of 40 Billion USD, the maximum fine would be a staggering 1.6 Billion USD. Which explains why a) FB moved their non-EU international user base out of Dublin and b) why there won’t be a European Facebook-clone replacing Facebook: the Zuckerberg-machine is munching through personal data like a 1978 supersonic Concorde is guzzling kerosine and has a history of approaching privacy with quite some laissez faire-bravado. Taking on this juggernaut by playing even more loose with user data has never been that winning an option. Now it’s completely off limits for European Entrepreneurs.
But does this mean the GDPR will really kill Europe’s still nascient digital business world? Actually, to the contrary. Think about it: if you run an international business, do you really want to exclude the citizens of the second largest economy (after China) from your potential market? Most likely not.
With a GDP of 19.9 Trillion USD, the EU pulls quite a bit of weight. But if all others, with a combined GDP of 127 trillion USD will continue to play loose, will Europe not become a digital pipsqueak, hopelessly left behind, while rainbow coloured unicorns start grazing all over the globe?
A Kosher (or halal) eater will never eat nonkosher (or nonhalal) food , but a nonkosher eater isn’t banned from eating kosher.
or
Someone with a peanut allergy will not eat products that touch peanuts but a person without such allergy can eat items without peanut traces in them.
That’s the whole secret. And it has major implications.
Now consider this manifestation of the dictatorship of the minority. In the United Kingdom, where the (practicing) Muslim population is only three to four percent, a very high number of the meat we find is halal. Close to seventy percent of lamb imports from New Zealand are halal.
The same applies to the GDPR. Don’t forget: in an international business, regulatory compliance is already quite a tricky beast. And if you start out with the lax American standards, some things won’t even be OK in next-door Canada. But if you design for compliance with the most demanding environment, you’ll be quite fine, out of the box, pretty much all over the world.
You may call this approach Europe First. But instead of a coal-fired America First, it’s actually an open source protocol. Everybody can use it anywhere for free, no strings or localities attached. You don’t have to be in Europe to be GDPR-compliant. Your user data doesn’t have to be in Europe to be GDPR-compliant. Not even your users have to be in Europe. But if they are, you better be prepared.
TED talks became a bit like the ten biblical plagues crossbred with Genesis 1:28 (be fruitful, and multiply) and a strictly enforced scripted reality TV format: the plentitude of mandatory upbeat ideas worth spreading has even been infecting non-TED talks, some talked about ideas are strictly chemtrails for academics, many the presenters with their trained TED-stage personalities are almost as bad as the cloned startup pitchers churned out by the countless accelerators.
Still, I went to TEDx BerlinSalon on Democracy. And, really, it was worth it. Mostly because of one talk. Lawrence Lessig on HOW DIGITAL DESTROYED DEMOCRACY (not yet posted).
In a nutshell, his reasoning goes like this:
In the 19th century, elites governed, had (mostly) no idea what their subjects thought, and the people got their information from very fragmented local media.
In the 20th century, broadcasting mainstreamed cultures and opinions, George Gallup came up with statistically relevant polling methods, and governing included feeling the pulse of what’s happening in the minds of their people.
In the 21st century, we’re back to media fragmentation – but now combined with hyper-competition and a built-in feedback loop.
In the 19th century, the fragmentation of media was mostly defined by locality. Local competition, of it existed, may have been fierce – but, due to the immense CAPEX and OPEX was quite limited.
In the 21st century, media has morphed into opinion factories with potentially global reach. The limiting resources aren’t capital or allocable spectrum, but our limited attention span. Polarization not only shouts for attention, it does it by playing towards our tribal instincts. Us vs. them is the cheapest way to create a pretend-relationship – but comes at a price: it becomes a problem for democracy.
Lessig’s case is quite convincing. By locking tribes into micro-medial echo chambers, our societies loose their connecting tissue. We, the people, make sense about our surroundings, our lifes by story telling. That’s why media matters. Media is about helping us to connect the dots. And, compared to other ways, like a preaching every Sunday in a church, media scales very, very well – making it a core building block of societies comprised of millions and millions of people. But if this building block is converted into trans-local tribalism, the effects are noticeably bad.
In true TED spirit, he had to attach a potential way out of the bleak conundrum we’re finding ourselves in. As there’s no way back to the broadly shared virtual fireplaces of 20th century broadcasting, he’s pointing towards a different democratic approach. His example: how Mongolia’s civil society is integrated into the political decision making process, thereby creating the missing “we” …
… but asking at the same time if a process like this might scale.
Lessig is brilliantly connecting the dots. But do I really subscribe to his diagnosis? Is it really the side-effects of digital, which are destroying democracy? Let’s not forget: the uniting factor of broadcast media is a quite double-sided sword. Nazi-Germany used their central control over broadcasting (and all other media) to destroy democracy quite effectively.
Granted: the ugly underbelly of the Internet is, yes, ugly. The bile of astroturfed tribes is poisoning all political conversations. Volume and frequency of the ugliness are deafening. But the tonality ain’t new.
Look at graffiti in Pompeji:
All the deadbeats and Macerius ask for Vatia as aedile.
Try the Lutheran Insulter, spouting out Martin Luther’s most over the top insults:
Even if the Antichrist appears, what greater evil can he do than what you have done and do daily?
For sure, the fake-media engines spouting partisan insults are not helping. Some of them are even directly based on Lessig’s diagnosis of same facts, different understanding. There are site operators catering to audiences to the right AND the left, reusing the same content, just changing a couple of words to change the bias.
But same facts, different understanding is the natural realm of the spinmeisters framing the story around the facts according to their paymaster’s needs, from climate change to tobacco smoke to gun control to however larger or small the issue may be.
Consequently, facts seem to have lost all meaning. If you can’t spin it, just use alternative facts.
But maybe the killer of the WE is not us living in our filter bubbles. Otherwise, the bile of Facebook comments and Twitter replies would not exist. In our modern technocracies, the WE is reduced to an incremental HOW.
Media, be it digital or printed or broadcasted, is always an echo chamber. Only resonating messages are amplified. By default, technocracy has no message to relay. Look at the EU. A war-torn continent uniting itself, a mind-boggling political project if there ever was one. A decade of populist onslaughts may well have ended in the demise of it. Was this driven by digital fragmentation? Most likely not.
Since ages, British print tabloids are masters of polarization. Pushing for BREXIT came as a natural to them (digital? well, not really.).
The most relevant effect as of so far for the EU: it’s finally finding a WE. For now, the populist successes of BREXIT and Trumpism is drawing Europe closer together, opening political talks way beyond the technocratic.
In the US, the situation is a bit different. The flag-waving WE was way to weak to cover the structural imbalances any longer.
Successful populists leverage any kind of media. The Commander in Tweet is not the result of a development in communications technologies.
The DAO is a Decentralized Autonomous Organization (“DAO”) – more specifically, it is a new breed of human organization never before attempted. The DAO is borne from immutable, unstoppable, and irrefutable computer code, operated entirely by its members, and fueled using ETH which Creates DAO tokens.
Thus spoke The DAO.
Which is just one possible way to implement Decentralized Autonomous Organizations.
A translation attempt into plain English may sound like this:
In traditional western economies, capital ownership, production and consumption are separated entities:
Uber investors pour billions of USD into a company they own.
The drivers invest into production (CAPEX like cars, OPEX like gas and insurances, their time) and pay their USD tribute to Uber’s shareholders.
Passengers pay USD for the ride.
A decentralized autonomous organization isn’t a shareholder construct, but a stakeholder model based upon securely transferable crypto tokens.
Every token holder is a stakeholder in the DAO’s ecosystem
Tokens can be held …
… or circulated to pay for services rendered or products received …
… or exchanged into another crypto token (e.g. Bitcoin) or any legacy currency
It’s a radically different type of participatory economy and may offer the chance to fix a dangerous flaw of our current monetary system:
– the “real” economy is dwarfed by an unbridled financial system
– the financial sector is pretty much decoupled from the “real”, productive economy
– but both spheres share the same tokens to exchange value: our traditional currencies like the EUR, the GBP or the USD
– those currencies are basically minted and controlled by the aforementioned financial sector.
A DAO token works like a programmable complementary currency. Traditional alternative systems looked like the Wörgl Schilling: a piece of paper used to locally exchange value to keep external problems at bay. Being just locally accepted is the key constraint – and the defining feature. Because the intent behind is purely local.
DAO tokens resemble complimentary currencies in this. They are constrained currencies. Traditional currencies are pretty much universal: highly fungible currencies like the USD or the EUR can be used to pay for any kind of product or service or asset pretty much all over the globe.
The Wörgl Schilling was only valid in Wörgl, the Bavarian Chiemgauer is only accepted in this beautifully set local economy:
… but not in Wörgl, located just a one hour car drive further down south in Austria.
Like with traditional complimentary currencies, the DAO token’s constraint is it’s limitation to a specific economy. It may be tied to a locality (like with the Chiemgauer) or a specific private entity (like airline miles, which are a certain form of private currency) – but is much more versatile.
In the DAO, the token is not only used to exchange value.
Every token owner is a stakeholder of the specified economy.
The token itself is programmable. Ideally, it becomes an intrinsic part of the whole process, not just the value exchange.
Token holders are a bit like owners of printed bearer shares: he who owns the physical share is the rightful owner of the asset represented in the paper. The company’s central ledger only lists the shares, but knows nothing about their ownership.
Crypto tokens, be it DAO or Bitcoin, pretty much automate all authentication, validation and transaction processes needed with an amazingly safe technology. Traditionally, all those transactions are safeguarded by a central authority. To buy shares of a company, you need to trust the company as the issuer, the stock exchange as the trade facilitator, the clearing house as the middleman, the settlement process for the exchange of assets (money/shares), and the custodian for administering your held securities.
Crypto transactions are pretty much trustless, meaning: as long as the crypto process is untainted, the whole chain of the transaction, from trade facilitation, clearing, settlement to custody services is inherently secure.
So how come somebody can instigate a rather dubious $79 million transaction?
Let’s go back to the trustless thing. If you read really carefully, you might have noticed I left an important piece out of the trustless specification: the issuer of the share.
And here’s the reason. Meet Victor Lustig. The man who sold the Eiffel Tower – twice. His con was actually pretty hilarious. He convinced a couple of Parisian scrap metal moguls that he represents the French government and they should bribe him for the right to melt down the rusting iron world wonder.
Some misplaced trust in charming Lustig later, the tower was still standing, the government still the owner of the cast iron hulk and Lustig’s target, one of the scrap metal dealers, a bit richer in experience and bit poorer in funds.
A trustless crypto transaction wouldn’t have affected Lustig’s con at all. Like every gifted con man, Lustig leveraged the conditio humana.
Every transaction is a chain of trust. The perceived transaction started with a land register certifying the French government as the rightful owner of the tower and ended with a cash transfer, a trusted means of value exchange.
But in the Eiffel Tower case, the starting point of the trust chain was Lustig and his made-up credentials. Or, to use crypto speak: the Genesis transaction was not building and owning the tower, but Lustig coming up with a fake identity and a masterfully implemented storyline.
Let’s go back to the DAO. In a rather spectacular crowd funding, a quite substantial amount of (crypto) money was raised. The basic premise:
Historically, corporations have only been able to act through people (or through corporate entities that were themselves ultimately controlled by people). This presents two simple and fundamental problems. Whatever a private contract or public law require: (1) people do not always follow the rules and (2) people do not always agree what the rules actually require.
The DAO is self-governing and not influenced by outside forces: its software operates autonomously and its by-laws are immutably chiseled into the Ethereum blockchain.
the problem: people are not always following rules or not always really agreeing what those rules really do mean.
the solution: immutable contracts.
Which are a really great solution for many real world problems. But not for the problems they try to solve. Because they missed (3) people cannot foresee all consequences a contract or by-law may have
One more story, one of my all-time favorites. The California electric grid operator built a set of rules for generating, distributing and paying for electricity. Those rules were dumb and bad. If you read them carefully and greedily, you could get paid silly amounts of money for generating electricity, not because the electricity was worth that much but because you found a way to exploit the rules. JPMorgan read the rules carefully and greedily, and exploited the rules. It did this openly and honestly, in ways that were ridiculous but explicitly allowed by the rules. The Federal Energy Regulatory Commission fined it $410 million for doing this, and JPMorgan meekly paid up. What JPMorgan did was explicitly allowed by the rules, but that doesn’t mean that it was allowed. Just because rules are dumb and you are smart, that doesn’t always mean that you get to take advantage of them.
Contracts have always been a complicated affair. Because they have to formalize a stable framework around fuzzy intentions by using language – which as a tool is inherently fuzzy as well.
The proposed solution for this inherent fuzziness created by the mismatches of intent and description and the thereby caused mismatching realities is probably a bit too ambitious: bug free software.
And what do you know: somebody smart quickly outsmarted the contract.
I have carefully examined the code of The DAO and decided to participate after finding the feature where splitting is rewarded with additional ether. I have made use of this feature and have rightfully claimed 3,641,694 ether, and would like to thank the DAO for this reward.
It’s unclear if the text has been written by the hacking trickster, who just wants to add a bit of insult to the injury. But the consequences of his contract are actually rather unclear as well. He may just be entitled to keep the load.
Because The DAO as a non-organisation constructed itself around the premise of its own infallibility. Read this part of self descriptive hubris:
The DAO will be deployed as an exact implementation of the Standard DAO Framework. The Whitepaper therefore describes perfectly how the DAO functions and is a great place to start learning more.
… exact implementation … describes perfectly …
Well. Obviously not that perfectly exact.
In the DAO’s belief system, acts of people are the problem, so let’s move them out of the equation. This created an entity ready to be preyed upon by other people of rather questionable intent. With the attack vector being people not being able to create 100% perfect contracts.
Hard core smart contractors don’t see a problem with this. Win some, loose some: it’s part of the package of immutability. Changing the rules after the fact may be technically possible, but violates the core principle of a Decentralized Autonomous Organization. Rolling back those transactions by an deus ex machina-act would inherently destroy the trust in the perfect engine: mind you, it worked actually without a fault.
Which is probably right. Because in their hubris, The Dao tried to construct themselves as an infallibility engine without any meaningful mechanisms for mediation or arbitration or recourse. And saving The DAO by ex-post changes might really hurt the underlying case for Decentralized Autonomous Organizations.
On the other hand: creating a machine, which enables smart contract-con men to systematically defraud unsuspecting token investors, who wouldn’t have any path of recourse at all … this sounds like a solid way to implement fringe system of very limited reach and effect.
Blockchains and smart contracts are amazing new tools in our overall technological toolset. We have to learn how to deploy them to the best uses (many of which have yet to be invented). That will take failures. The DAO is not the first one (e.g., Mt. Gox) and won’t be the last one.
Unfortunately, the first DAO failure might have been somewhat expensive.
Yes, everyone is a bit late in the game (due to lack of clear specifications), some lawyers and consultants are making a killing, some tech and product teams loose sleep and weight.
TED talks became a bit like the ten biblical plagues crossbred with Genesis 1:28 (be fruitful, and multiply) and a strictly enforced scripted reality TV format: the plentitude of mandatory upbeat ideas worth spreading has even been infecting non-TED talks, some talked about ideas are strictly chemtrails for academics, many the presenters with their trained TED-stage personalities are almost as bad as the cloned startup pitchers churned out by the countless accelerators.
The most relevant effect as of so far for the EU: it’s finally finding a WE. For now, the populist successes of BREXIT and Trumpism is drawing Europe closer together, opening political talks way beyond the technocratic.
… but not in Wörgl, located just a one hour car drive further down south in Austria.
gert.is 